There is no question that the coronavirus quarantine is placing a strain on a number of relationships, and has made some realize that divorce is their only option for moving forward with their life. One of the main stressors involves people losing their jobs and/or a percentage of their net worth as a result of the quarantines and market upheaval. Some separated parents who are not yet divorced are also finding themselves in compromised situations due to the virus, whereby they now have new concerns about the other parent spending time with their children, which is also speeding up a desire to move forward with divorce. Some in the throes of divorce are even now find themselves living in the same house together due to the timing of the quarantine, and a percentage may be stuck in an abusive situation, not necessarily able to run to a friend or family’s home for shelter due to social distancing concerns. Those at risk of physical abuse are especially vulnerable now right now and may not be able to seek out medical help by going to the hospital due to virus concerns.

During this time, it is important for people to realize that filing for divorce is not an option, as any judges that are making themselves available are doing so only for emergencies such as domestic violence. Still, it also makes sense to discuss these issues with a divorce attorney as soon as possible so that as soon as the cloud lifts and the courts reopen, you are ready to go, do not suffer from the backlog, and are using this time to prepare and protect yourself. This could also be important for some because they will want to get the divorce filed before certain assets start to increase in value again and some services may be available at the moment even though you do not realize it. For example, restraining orders are still considered essential services: Even with a pandemic, courts can order abusers to move out of the home, and some courts are even getting creative and finding ways to use technology to allow some documents to be e-filed and allow people to attend court via video conference.

Using This Time To Plan Creatively & Anticipate How The Virus Will Affect Divorce

Your attorney can be helpful in trying to come up with a creative, effective solution to help you in the short term in the event that whatever you need cannot be filed at this time. For example, some may want to plan for the possibility of mediation or alternative dispute resolution as a potential solution to the court closures and backlog. In addition, most-everyone will likely want to discuss what to do about any financial fallout that has occurred to investments and financial obligations due to the coronavirus, including any changes to the job market that might affect post-divorce plans and any potential child support payments.  If this specifically affects you, you and your attorney may also want to discuss preemptively addressing the court about child-related financial obligations, as child-support cannot be modified once that the payment becomes due. it is also important to realize that any property division issues that include selling the family home also will also be affected by the virus.

In sum, consider taking the following considerations and steps into account in order to help your peace of mind this time:

• Plan for how you will pay for your living expenses during and after divorce
• Plan for any business evaluations, home appraisals, etc. to be revalued
• Assess what is likely to be affected by the virus and plan accordingly with your attorney, such as financial settlements, divorce settlement proposals, any plans to sell your home, co-parenting arrangements, child support payments, etc.
• Understand the specifics of how the virus is going to affect your divorce timeline and any corresponding financial repercussions, and update your financial documents accordingly

Contact Our Florida Family Law Attorneys for Help

Family court issues can already be difficult enough without also having to deal with the stress brought on by the coronavirus. When it comes to divorce and other family law issues, you need an experienced Tampa family attorney on your side to help ensure your best chance for success. Contact HD Law Partners today to find out about our family law services and our dedication to our clients.

Resource:

forbes.com/sites/heatherlocus/2020/04/01/6-ways-the-coronavirus-can-infect-your-divorce–and-simple-steps-to-protect-yourself/#40156f632b65

fastcompany.com/90484695/i-could-knife-him-in-the-back-what-its-like-seeking-a-divorce-during-coronavirus

nypost.com/2020/04/03/sick-of-you-lawyers-see-coronavirus-divorce-uptick/

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The issue of the coronavirus potentially causing business losses and a number of U.S. companies thinking that their insurance policies cover this loss of revenue due to the outbreak will likely be a significant source of insurance bad faith litigation as we face more and more losses due to the virus. According to the Organisation for Economic Cooperation and Development, if the virus continues along its current path, it could cut the year’s global growth by half to 1.5 percent for the year, causing a $1.5 trillion loss due to the disease.

Business Interruption & Contingent Business Interruption Insurance Policies

Many are estimating that these losses will be greater than disasters such as Hurricane Katrina, but less likely to be insured. This is because while most-all companies have business interruption insurance as part of their insurance policies in order to cover operations losses when business has to halt unexpectedly, these policies are almost always linked to “direct physical loss or damage” as the definition of what constitutes loss that validates payment, and quarantines do not cause physical damage in the same way that a fire or earthquake does.

This same logic also essentially applies to contingent business interruption insurance policies, which cover disruptions due to policyholders’ suppliers. Even if some insurers do agree to cover decontamination costs after an outbreak, they tend to tightly regulate these costs, having strict ceilings and limits on how much they pay out to cover them. This is likely due, in part, to disasters linked to SARS, Ebola, and Zika outbreaks, all of which lead to a number of business interruption claims that became unwieldy such that a number of insurance companies took steps to explicitly exclude outbreaks from business interruption claims in contracts. Some companies even took steps to come up with a specific, separate type of business insurance that was specific to outbreaks like these and which is designed to kick in when deaths due to an epidemic reach a certain threshold or when a particular event occurs, such as a travel ban or government shutdown, where the business chooses the event and customizes the insurance policy based on its own assumption of risks.

Florida Insurance Bad Faith Attorneys Representing Insurance Carriers

Still, in spite of these clear policy limits spelled out in insurance contracts and insurance companies only being enabled to pay out benefits where coverage and liability are clear, a “storm” of litigation is expected over this issue as companies try to get around these exclusions, potentially arguing that an outbreak epidemic constitutes “physical damage” to the workplace.

HD Law Partners represents insurance carriers when there are good faith disputes over coverage, damages, or liability, as well as defense of claims alleging insurance bad faith or plaintiffs seeking extra-contractual liability. Contact our Tampa insurance bad faith attorneys today with any questions you might have about our services.

Resource:

nytimes.com/2020/03/05/business/coronavirus-business-insurance.html

oecd.org/economy/global-economy-faces-gravest-threat-since-the-crisis-as-coronavirus-spreads.htm

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How Florida’s Business Judgment Rule Protects Corporate Directors

One of the main reasons that people create a legal entity for their business, such as a corporation or a limited liability company, is for liability protection. That is to say, such entities shield individual owners or directors from personal liability for actions taken by the business as a whole. An aggrieved party can therefore only seek monetary damages against the entity itself.

To strengthen this concept, American law has long recognized a principle known as the business judgment rule. This basically states that a judge (or jury) should not second-guess business decisions made by the directors or managers of a company, presuming they acted in good faith and within the scope of their legal authority. For example, a person cannot sue the individual members of a corporation’s board of directors simply because he disagrees with a business decision made by the board as a whole.

While the business judgment rule has long been recognized by the courts as part of the common law, it has also been codified by the Florida legislature. Section 607.0831 of the Florida Statutes expressly provides that a director is normally “not personally liable for monetary damages to the corporation or any other person” with respect to their actions (or inactions) as a director. Again, there are exceptions, such as for bad faith or where the director obtained an improper benefit from their actions.

Florida Appeals Court: Defendant Not Required to Plead Business Judgment as an Affirmative Defense

Section 607.0831 broadly applies to the directors of corporations, LLCs, and non-profit corporations. The Florida courts, however, have extended its provisions to also cover certain “common interest associations.” For instance, the Florida Third District Court of Appeals recently noted the business judgment rule also protects the decisions made by a condominium association’s board of directors.

The case before the Third District, New Horizons Condominium Master Association, Inc. v. Harding, involved what it described as a “garden-variety condominium dispute over assessments.” Basically, there was a master association comprised of seven sub-associations. Each sub-association appointed a member of the master association’s board. A dispute arose between one of the sub-associations (and its appointed director) and the master association’s board over a payment to a cable company.

When the sub-association sued, the master association said its actions were protected by the business judgment rule. The trial court rejected that position and ruled in favor of the sub-association. On appeal, however, the Third District sided with the master association and held the rule did apply.

The legal question was whether the master association was required to plead the business judgment rule as an “affirmative defense” to the sub-association’s lawsuit. The Third District said there was no prior Florida case imposing such a requirement. And as it read section 607.0831, immunity under the business judgment rule automatically protected the defendant unless the plaintiff–in this case, the sub-association–offered proof as to why some exception to the rule should apply.

Contact Us Today

Business disputes arise every day over a variety of reasons. If you are involved in such a dispute and need legal advice from a qualified Tampa business and corporate attorney, contact HD Law Partners today to schedule a consultation.

Source:

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0600-0699/0607/Sections/0607.0831.html

scholar.google.com/scholar_case?case=3086575382300259989

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When you are in the process of going through a divorce you may receive a notice that your deposition will be taken by your spouse’s attorney. Lawyers take depositions in order to discover information, find out more about what a potential witness might say, and preserve testimony for trial. This can not only help them with evidence, but also potentially gather statements that can be used against your interest and credibility. It is very important that you work with your attorney and prepare for the divorce deposition, as preparation is key for these depositions. You never want to go in without knowing what to expect and having practiced.

Duration, Those Present, & Formalities

Divorce depositions are usually around three hours long (although they depend on the specific circumstances of the divorce) and include your attorney, your spouse’s attorney, and the court reporter to record answers word-by-word. Your spouse may also be present, as well as any others that are relevant to the case; for example, a Guardian Ad Litem or child representative. Judges are not present and will not review the deposition transcript unless an attorney calls on them to do so.

As the procedure begins, you are asked to use your right hand to swear an oath and you will then sit down and be asked questions by the attorneys, most-all of which will come from your spouse’s attorney. The results of the session will be a transcript typed out by the court reporter, which you will be allowed to review, and which can be used during trial.

You should also know that this is a formal and important process, and most attorneys are very skilled at taking depositions and how to extract what they want out of the witness. Below are some helpful tips to keep in mind:

Take Your Time – Pause Before You Answer

Always pause, think and take your time before answering. You are not under any time constraints or rush to answer. It is better if you carefully listen to the question and concentrate on each word before you answer.

To this end, know that it is also possible that your attorney may object to certain questions. As a result, you also want to pause before providing an answer in order to give your attorney a chance to provide that objection. It is entirely possible that you will be expected to still answer the question, but it is important to still provide an opportunity for the court reporter to record that objection made first.

Only Answer the Question Asked

Make sure that you only answer the question asked and do not offer any extra information. You want to make sure that you concentrate on the substance of the information you are providing as opposed to being a helpful witness. It is not your job to be helpful to the attorney asking the questions; simply keep your answers short and to the point.

Know that some attorneys have particular techniques to try and obtain additional information from witnesses, such as giving them the silent treatment. Do not be tempted to fill this silence with words. Some attorneys may instead continue to ask you the same question in different ways; know that they may simply be trying to elicit a different answer or extract more information from you, and do not be afraid to stick to your first answer.

Feel Free To Indicate That You Do Not Understand The Question, Do Not Remember, Or Do Not Know

Also feel free to ask for clarification if you do not understand the question. It is up to the attorney to ensure that their question is unambiguous, and it is not your job to help them. Do not provide a conditional answer (for example, “if you mean x, then y,”), but simply indicate that you do not understand the question. If you do not remember or do not know, these are completely acceptable answers as well. It is not a good idea to guess the answer.

When You Are Questioned About Particular Documents

If a question involves examining documents, know that this is a very important part of the deposition and you need to very closely read the fine print. Never testify about the content of a document you are not completely familiar with unless it is right in front of you and you have been provided with a full and complete opportunity to read it. Always check the document before answering if the attorney is trying to suggest that the document states something in particular.

Contact Our Florida Divorce Attorneys for Help

If you need assistance with any family law issue, our experienced Tampa divorce attorneys can help. Contact HD Law Partners today to schedule a consultation.

Resource:

natlawreview.com/article/help-how-do-i-prepare-divorce-deposition

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One issue that has already come up in a number of contexts due to the coronavirus pandemic, including when it comes to business and landlord-tenant breach of contract claims, is the force majeure clause, or the provision in contracts which excuses non-performance of some contract obligations if certain unforeseeable events occur which makes fulfilling these obligations impossible (usually known as “acts of God”). Historically, these clauses have included earthquakes, floods, hurricanes, and sometimes also labor disputes, strikes, wars, etc.

However, some commercial tenants are now arguing that COVID-19 constitutes a “force majeure” event that makes fulfilling their rent obligations impossible, while many businesses have been and continue to argue that they cannot fulfill their contract obligations due to COVID-19 creating extraordinary and unforeseeable events.  These events and circumstances include workers unable to show up for work, having to close down facilities, states mandating social distancing, supply chains abroad shutting down, etc. There is no question that the courts will be filled with these disputes once that they are up and running again.

What Force Majeure Clauses Actually Provide For

However, it is important to note that, while courts will always first look to the clause itself in the contract to determine what, specifically, the parties agreed to, most of the time, these clauses are boilerplate provisions that are given very little attention and time during the drafting of the contract, and rarely do they specifically mention pandemics. In addition, the courts are hesitant to allow for force majeure to excuse contract obligations due to changing economic conditions and hardships. This arguably leaves these disputes in a similar position that many businesses are in with insurance companies regarding business interruption insurance and the pandemic, with insurance companies arguing that business interruption insurance does not cover business losses due to COVID-19 and commercial landlords arguing that commercial leases do not provide for nonpayment of rent due to financial hardship caused by a pandemic.

Providing Notice

In addition, when invoking a force majeure clause, a party has to provide notice to the other party (to the extent that it is possible) so that that party has the option of modifying their order, accepting delay, or terminating the contract and going elsewhere; a procedure which has been difficult to follow through with during COVID-19, as everything, including shutdowns and mandatory social distancing, has been proceeding very quickly and not always with notice.

Contact Our Breach of Contract Attorneys to Find Out About Florida

While Florida Governor Ron DeSantis did enter a moratorium on evicting tenants for 45 days from April 2 and the Florida Supreme Court suspended clerks from issuing writs of possession through May 29, DeSantis’ measure only applies to residential tenants, not commercial tenants. Still, with court closures, commercial landlords may have difficulty with enforcement, as will businesses that have concerns about breach of contract issues that they cannot yet litigate due to closures. However, you do have some options available to you during this time – Contact our Tampa breach of contract attorneys at HD Law Partners today to find out more about what those are.

Resource:

flgov.com/wp-content/uploads/orders/2020/EO_20-94.pdf

floridasupremecourt.org/content/download/633282/7195631/AOSC20-23.pdf

reuters.com/article/us-health-coronavirus-livestock-insight-idUSKCN2292YS

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Battles over decorations between residents and homeowners’ associations is a common issue that both associations and property managers face on a regular basis here in Florida. This is one reason why you want to make sure that, as an association, you work with an experienced homeowners’ association attorney in creating association documents or amendments, as well as the appropriate covenants and restrictions, so that you are best able to manage these disputes and know what your rights beforehand – before they come up, or turn into expensive legal battles that can last decades.

Take a case that heads to trial in late February here in Florida after nine years of back-and-forth disputes between one unit owner and his homeowners’ association: The dispute involved the resident wanting to display an American flag in a flowerpot, which defied the homeowners’ association’s rules. After initially filing a federal lawsuit in 2012, his homeowners’ association settled and agreed that he could display the flag as long as his display complied with association rules. In exchange, he agreed to refrain from making disparaging statements about the association. However, one year later, the association began to assess a fee against him because of a new association rule about not allowing displays in flower pots, specifically. The resident once again filed a federal lawsuit against the association, and cited the Freedom to Display the American Flag Act of 2005. However, a federal judge dismissed his lawsuit because the law does not provide unit owners with the right to sue in federal court. Meanwhile, the association filed suit against the resident for making disparaging comments about it.

What Federal & State Law Allow For, Specifically

Florida law states that “any unit may display one portable, removable United States flag in a respectful way.” That same law also provides unit owners with several other rights, for example, the right to install an electric vehicle charging station within their own common element parking area as long as it does not cause irreparable damage to the association’s property and the unit owner is responsible for all costs associated with it.

In allowing for the right to display an American flag, this state law simply reiterates rights already provided by the Freedom to Display the American Flag Act of 2005. However, the federal Act indicates that associations may, at the same time, adopt reasonable restrictions that are necessary to protect the substantial interests of the association, such as those that pertain to the manner, place, or time regarding the display of the flag. As a result, an association seeking to place some restrictions on the ability for unit owners to display their flags should consult homeowners’ association attorneys to ensure that any time, place, or manner restrictions fall under the association’s rights.

Speak with A Florida Homeowners’ Association Attorney If You Have Concerns

At HD Law Partners, our Tampa homeowners’ association attorneys provide the very best in legal advice and representation to homeowners’ associations throughout Florida, ensuring that associations do not get stuck in legal battles like these that can last decades and cost too much. With over 40 years combined experience, we have dealt with a myriad of homeowners’ association issues, and know what to expect. Contact our office today to find out more.

Resource:

jacksonville.com/news/20200221/jacksonville-veterans-trial-over-right-to-fly-flag-begins-monday

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In February, a jury awarded one plaintiff almost $8.5 million verdict, which included eight million dollars in punitive damages, as a result of an insurance bad faith litigation claim brought against insurance company National General. The case is one that all insurance companies should be aware of in terms of what it means to thoroughly investigate a claim and whether or not a good faith dispute over coverage validly exists. It involved an insurance claim filed on a fire damaged RV, which was ultimately denied by National General after several of the company’s investigators found the incident to be suspicious and reported claiming that the fire originated in two separate locations and was caused by the actions of an individual. The insurance company ultimately came to suspect that the plaintiff may have set the fire himself.

It is also notable that the Florida legislature is currently floating a proposal to adjust issues related to bad faith lawsuits brought against insurers here in Florida; a proposal that would ultimately benefit insurance carriers, who currently face bad faith actions fairly regularly when it comes to disputes over coverage.

Factors In The Jury’s Decision

In its decision, the jury in the case appeared to be especially concerned about the number of investigations that National General conducted, as was unearthed by the discovery process. According to reports, the initial investigation implied that the fire was an electrical fire, however, once that National General realized that the damage was covered under the plaintiff’s policy, the second investigation instead concluded that fire may have been intentionally set and suggested that the plaintiff had something to do with it. The company then denied the claim, insisting that the plaintiff had filed a fraudulent claim and misrepresented the incident.

The jury, however, sided with the plaintiff, finding that National General manipulated the facts and dictated some of its subsequent investigations in order to reach the conclusion that worked in its best interest. National General had gone so far as to not only deny the claim of a policyholder who was in good standing and able to prove that he was not home when the fire occurred, but also investigated his family, which the jury found to be a clear act of bad faith.

Florida Senate Bill Could Decrease Bad Faith Litigation Brought in Florida

Because the determination of what constitutes “bad faith” is placed in the hands of a jury instead of a judge, it is not uncommon or insurers to be hit with verdicts in the millions of dollars; even where policy limits are significantly less (for example, $50,000 or less). However, a current Senate proposal would require that any civil remedy notice specify the amount of damages that are being sought from an insurer so that they can try to cure any alleged violations and prevent a bad faith lawsuit.

Contact Our Florida Insurance Bad Faith Defense Attorneys If You Have Questions

HD Law Partners represents insurance companies whenever there is a dispute over liability, coverage, or damages. The firm also provides defense services where there are insurance bad faith claims and plaintiffs seeking extra-contractual liability. Contact our Tampa insurance bad faith attorneys today to find out more about our services.

Resource:

rvtravel.com/jury-935/

clickorlando.com/news/florida/2020/02/04/florida-house-renews-debate-over-ending-no-fault-auto-insurance-system/

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Florida lawmakers are currently considering a bill that would affect a number of commercial landlord and tenant issues by addressing the ability for tenants to keep emotional support animals. Specifically, while it would prohibit landlords from charging more for emotional support animals, it would also allow them to ask for proof and hold a pet owner liable for any damage that they cause to property. In addition, the legislation mandates that any pet owners who obtain fraudulent letters in order to keep their pets as emotional support animals would also be penalized.

The bill has come about in part as a result of commercial landlords complaining that people are exploiting their ability to simply keep a pet with them at all times by claiming that they are emotional support animals.

What Current State & Federal Law Dictates

For legal purposes, it is important to distinguish between service dogs covered under the Americans with Disabilities Act (ADA) and emotional support dogs. The ADA dictates that individuals with disabilities may have their service animals in all areas that constitute “public accommodations,” such as stores, restaurants, schools, hotels, apartments, etc. These animals are specifically trained to assist someone with mental, physical, psychiatric, intellectual, or other disability, and the animal’s work must be directly related to that. For example, if someone is blind, they may have an animal that helps them cross the street.

However, Florida law does not protect the issue of emotional support animals in the same way (i.e. animals that provide a sense of safety or comfort to those with emotional disabilities or conditions). As a result, landlords and others have never been required to allow emotional support animals under state law. That being said, the federal Fair Housing Act does require housing facilities to allow both service dogs and emotional support animals in the interest of those with disabilities and conditions to have equal opportunity because, under the law, this animal is recognized as a type of assistance that represents a “reasonable accommodation” under the Act. As a result, the U.S. Department of Housing and Urban Development, which oversees the Act, investigates any related claims of housing discrimination, and currently allows housing providers to ask only two questions when it comes to considering requests to have an emotional support animal on the premises:

• Does the applicant have a disability (mental or physical impairment) that limits one or more major life activities?
• Does the animal provide emotional support that affects their disability and/or does the animal work or otherwise provide assistance for the benefit of that person?

These individuals must only submit reliable documentation of the disability if “the disability is not known or readily apparent.” As a result, if this legislation passes, there may be significant confusion amongst landlords concerning whether or not they are complying with landlord and tenant rights under both state and federal law.

Contact Our Florida Commercial Landlord & Tenant Attorneys If You Have Questions

If you as a landlord have questions about drafting a commercial lease so as to ensure that it complies with what both state and federal law requires, enforcing an existing lease, or otherwise handling an eviction proceeding, contact one of our experienced Tampa commercial landlord & tenant attorneys at HD Law Partners in order to ensure that you are protected.

Resource:

animallaw.info/article/faqs-emotional-support-animals

nbc-2.com/story/41569232/florida-bill-would-allow-landlords-to-require-proof-for-emotional-support-animals

ada.gov/regs2010/titleIII_2010/titleIII_2010_regulations.htm

Posted in Homeowners Association, Landlord Tenant | No Comments »

As Florida attorneys who provide legal representation to homeowners’ associations (HOA), while also representing those affected by a foreclosure proceeding, the issue of homeowners’ associations foreclosing on homes over unpaid fees can be a challenging one that affects more people than you realize; especially since some 30 to 40 percent of the country lives in homeowners’ association communities. Many people and possibly even some homeowners’ association do not realize that in Florida and a number of other states, if you fail to pay assessments and dues, the association can obtain a lien on your property that leads to foreclosure. In fact, most people think that only their mortgage lender can seize their property.

However, the law also dictates that the association cannot file this lien unless it first provides the homeowner with 45 days to pay what they owe via a written demand. Still, in its assessments lien, it can not only include unpaid assessments in the lien, but also late charges, interest, and attorneys’ fees. Defaulting on assessments means that the association can foreclose by filing a lawsuit, even if you are current on your mortgage payments. This is why – if you are involved in a disagreement with your association – failing to pay fees is not the way to address the disagreement; rather, speaking with an attorney to discuss your options makes more sense; especially since it can be difficult to even figure out how much is actually owed to the HOA.

Seizing A Home Over $250 In Unpaid HOA Fees?

There is no question that a number of homeowners do not completely understand the ability for associations to foreclose on their home after they have purchased it, and are shocked when they find themselves in the position of losing a home that they’ve paid hundreds of thousands of dollars for over several hundred dollars in unpaid homeowners’ association fees. As a result, a number of associations try to ensure that they try to collect several times before resorting to foreclosure.

Exploiting The Tragedy

Still, the foreclosure issue can leave homeowners in a serious bind, especially when it comes to companies that may be tempted to purchasing homes under foreclosure for a small amount of money and seek to sell the homes back to their owners for much higher prices. It can also leave homeowners in a situation where they essentially still owe a mortgage payment for a home they no longer own.

Fighting Back

Some Florida associations have found that it is a waste of time to foreclosure on a home if it has a superior mortgage because even if the association ends up with the title, it is possible for the mortgagee to take the property from the association. In addition, it is important for all parties to note that the statute of limitations to pursue unpaid assessments is five years.

Contact Our Florida HOA & Foreclosure Attorneys If You Have Any Questions

If you are a Florida homeowners’ association with a question about unpaid dues and foreclosure, or a homeowner potentially facing foreclosure, do not hesitate to reach out to our experienced Tampa homeowners’ association attorneys at HD Law Partners today to find out more about your rights and options.

Resource:

https://marketwatch.com/story/condo-fee-foreclosures-become-headache-for-homeowners-2015-01-09

Posted in Homeowners Association, Landlord Tenant | No Comments »

As commercial landlord and tenant attorneys who help ensure that landlords have enforceable commercial leases and experienced counsel to help with any disputes, one of the issues that we frequently assist landlords with here in Florida are common area maintenance, or “CAM” charges. These charges have a significant impact on the property’s net operating income and how much tenants pay. However, disputes can arise with tenants when it comes to CAM charges because unique situations may require costs to be calculated in a way that is different than what is spelled out in the current lease terms. As a result, it is important for commercial landlords to have a thorough understanding of what CAM charges are/include and how to properly account for them in the lease, with the assistance of an experienced attorney.

Below, we discuss what CAM charges are, what’s included in them, the types of commercial real estate leases that do and do not include them, and how they are calculated:

What They Are/Include

While CAM charges are very generally maintenance costs related to managing and maintaining commercial property, there really is no one definition as to what exactly is included in them because they vary based on the market and the property. They are designed to provide property owners with some protection from increasing costs so that the property’s return on investment isn’t significantly impacted. These charges typically include the cost of cleaning, maintaining, and repairing common areas of leased property, although the exact charges depend upon the exact lease that the landlord and tenant agree on; they can be limited to a few items, or they can be broader, covering expenses related to:

• Bathrooms
• Elevators
• Hallways
• Lawn care & landscaping
• Parking lots
• Sidewalks
• Snow removal
• Utilities
• Needs that are unique to the property, such as security, building repairs, property management fees, administrative costs, permit expenses, property taxes, property insurance, and anything else landlord may want to include.

While these costs can sometimes be scary to the tenant, they can also be beneficial in that landlords will sometimes put off maintenance costs if they have to bear the cost themselves.

Where They Appear In Commercial Lease Terms

Not all properties include these charges. They tend to be included in industrial, retail, and warehouse spaces; while office spaces tend to include them in the rent. Specifically, the following types of commercial real estate leases tend to involve some type of CAM charges:

• Triple net leases: The tenant tends to pay CAM charges and takes on all of the responsibilities in terms of paying their share of property taxes, insurance, and common area maintenance. The only responsibility landlord has is covering the capital expenditures, which means repairs to the property; although expenses can vary depending on what landlord and tenant have agreed on during lease negotiations. These types of leases tend to apply to retail properties, such as shopping centers and restaurants
• Net leases: The landlord pays for the common area maintenance while the tenant pays for property insurance and taxes. This type of lease is less common but it is attractive to some tenants because it minimizes risk. It is also sometimes seen where multiple properties share common area expenses, however, the base rent is higher
• Gross leases: Very common in office buildings; where the landlord covers common area maintenance, property taxes, and insurance, and tenant pays flat rent rate without fluctuation based on insurance, maintenance costs or property taxes. The landlord will even sometimes cover utilities.

How They Are Calculated

It is important for property owners to work with attorneys so as to ensure that the leases are structured so as to maximize the return on investment. This typically involves passing CAM charges onto the tenant. However, how CAM charges are calculated also matters. The most common way they are calculated is based on square footage of the property, where each tenant pays their share of the property’s expenses based on the space occupied by dividing the total cost of maintenance by the square footage of the property to get cost per square foot. However other options are:

• Load factor: whatever percentage of the building is used as a common area is added to the square footage of the space rented, which then gives you rentable square footage to base rent on
• Fixed: property owners set a flat fee for common area maintenance and work in small annual increases to cover inflation. You see some shopping malls doing this
• Capped charges: some tenants may attempt to negotiate a cap on how much they will be required to pay towards common area maintenance

Contact Our Florida Landlord & Tenant Law Attorneys

Commercial landlord and tenant law can be extremely complicated, especially when disputes arise. As a result, building in every precaution to your lease with your tenant is the best way to protect yourself as a commercial landlord.

We can help you ensure that you have the best enforceable commercial lease. Contact our Tampa commercial landlord and tenant lawyers at HD Law Partners to learn more about our services today.

Resource:

Posted in Homeowners Association, Landlord Tenant | No Comments »